January 22, 2010

FW: (BN) Top Stories: Commodities

Jan. 22 (Bloomberg) -- The following are the day's top stories
on commodities:

Sugar May Advance 20% in First Half on Supply Gap, Top Thai Exporter Says
Sugar futures may climb 20 percent by June, extending the
rally to the highest level since November 1980, as global
demand exceeds supply, said Thai Sugar Trading Corp., the
country's top exporter. Prices could increase to 35 cents a
pound by mid-year, Piromsak Sasunee, the general manager, said
in an interview. Raw sugar for March delivery, the most active
contract, ended at 29.26 cents a pound in New York yesterday.
India, China, Indonesia, Pakistan, Egypt and Russia are among
nations planning to buy sugar to cool domestic prices,
straining supplies forecast by broker Czarnikow Group Ltd. to
lag behind demand by 13.5 million tons in the 2009-2010 season.
Sugar had its biggest annual gain since 1974 last year because
of rains and drought in Brazil and India, the largest growers.
``The market remains bullish,'' Piromsak said in Bangkok
yesterday. ``The price is on an upward trend. India will be a
key factor driving the market this year.'' Thailand is the
world's second-biggest exporter.

Copper Slumps to One-Month Low as Metals Drop on Chinese Lending Concerns
Copper dropped to a one-month low and was set for its worst
week in six as industrial metals fell on concern China will
take more steps to slow growth and after U.S. President Barack
Obama proposed to cut bank risk-taking. Copper for three-month
delivery on the London Metal Exchange fell as much as 1.1
percent to $7,194 a metric ton, the lowest price since Dec. 24.
The metal gained 0.7 percent earlier as its discount to
Shanghai increased, spurring Chinese buying. The contract
traded at $7,265 a ton at 2:24 p.m., down 2.2 percent this
week, the most since the week ended Dec. 11. China's record
bank lending and $586 billion stimulus spending drove raw
material demand and helped prices more than double last year.
Imports by China climbed for a second month in December to
244,013 tons, extending a rebound from an 11-month low, the
customs office said yesterday. ``Metals are pressured by
concerns about China's tightening,'' said Chen Jian, an analyst
at Minmetals Haiqin Futures Co.

Commodities Have Further to Advance This Year, Hermes Fund's O'Shea Says
Commodities, as measured by the S&P GSCI Light Energy
Index, may gain as much as another 10 percent this year, led by
oil, sugar and coffee, according to Colin O'Shea, head of
commodities at Hermes Fund Managers Ltd. The index, which
Hermes uses as a benchmark, advanced 15 percent last year,
buoyed by Chinese demand for oil, copper and other commodities.
The gauge has a 36 percent weighting in energy, 30 percent in
agriculture and almost 18 percent in industrial metals, based
on data from Jan. 21. ``Last year, we had very strong demand
from emerging markets, particularly from China,'' said O'Shea,
who forecast a gain of 5 percent to 10 percent in the index and
manages 1.2 billion pounds ($2 billion) across three funds.
``Will demand continue? We believe so, albeit at a lower
rate.'' China's economy, the world's largest copper consumer
and second-biggest oil user, accelerated to the fastest pace
since 2007 in the fourth quarter, the statistics bureau
reported yesterday. The World Bank on Jan. 20 raised its
forecast for 2010 global growth to 2.7 percent, compared with
an estimate in June of 2 percent.

India's Commodity Futures Turnover May Rise 43% to Record, Regulator Says
Turnover on commodity exchanges in India, the world's
biggest gold consumer, may rise 43 percent to a record this
year on higher prices and volumes, the industry regulator said.
Commodities worth 75 trillion rupees ($1.63 trillion) may trade
on India's 22 exchanges in the year ending March 31, up from
52.5 trillion rupees a year ago, B.C. Khatua, chairman of the
Forward Markets Commission, said in an interview in Mumbai. The
forecast compares with his June estimate for a gain of more
than 20 percent. Copper, sugar and lead prices doubled last
year, helping raw materials post the biggest annual gain in
four decades, as Chinese demand compensated for the slump in
the world economy. Commodity bourses in China, closed to
foreigners like those in India, clocked a record turnover of
$19 trillion in 2009. ``Given the limitations on international
players, and the corporates are not there in a big way, the
growth has been pretty satisfactory,'' Khatua said. ``In the
current year the growth is somewhere around 45-50 percent.
That's pretty good.''

Oil Advances on Inflation Outlook as Dollar Link Fades: Chart of the Day
Crude oil prices will move in tandem with investor
expectations for higher inflation as last year's inverse link
to the U.S. dollar fades, Morgan Stanley said. The CHART OF THE
DAY plots oil, the euro-dollar exchange rate and expected
inflation -- measured as the spread between nominal and
inflation-linked 10-year Treasuries, or TIPS. All three moved
together until the middle of December, when crude rose even as
the euro weakened versus the dollar, a currency move that has
typically been bearish for oil. ``The TIPS market is signaling
that the market is starting to price in higher inflation
expectations, and we think this will become an increasingly
important driver of oil prices going forward,'' Morgan Stanley
analysts Hussein Allidina and Seth Kleinman said in a report.
The New York-based bank said it expects the dollar to
strengthen 10 percent versus other developed-market currencies
this year, a move that won't hold back a rally in crude. Last
year, oil futures surged 78 percent in New York as the dollar
fell to a one-year low against the euro in November.

Gold May Rise in London as Weaker Dollar and Three-Week Low Spur Purchases
Gold, little changed in London today, may climb as a weaker
dollar and the metal's drop to a three-week low prompt
investors to buy. The dollar slid as much as 0.5 percent
against the euro on concern a U.S. proposal to curb financial
institutions' risk trading will deter investors from buying
assets in the world's largest economy. Bullion, which yesterday
fell to the lowest price since Dec. 30, usually moves inversely
to the greenback. ``Yesterday we had a lot of pressure on gold,
and overnight we've seen some physical demand,'' said Afshin
Nabavi, a senior vice president at bullion refiner MKS Finance
SA in Geneva. ``The physical market thinks these prices are
fantastic to buy at. The dollar is also a little bit lower.''
Gold for immediate delivery added $1.05, or 0.1 percent, to
$1,095 an ounce at 8:57 a.m. local time. The metal is down 3.2
percent this week, headed for its biggest slide in six weeks.
Bullion for February delivery was 0.8 percent lower at
$1,094.60 on the New York Mercantile Exchange's Comex division.

Rubber Drops Most in Four Months as Obama Plan Spurs Yen Rally, Stock Sale
Rubber slumped by the most in four months on concern that
investor demand will weaken after a U.S. proposal to restrict
risk-trading spurred a rally in the yen and a sell-off in
global stocks. Futures in Tokyo tumbled as much as 5.8 percent,
the most in intraday trading since Sept. 14. President Barack
Obama called for limits on the trading activities of banks as a
way to prevent another financial crisis. The yen rose to a
one-month high against the dollar and Japan's Nikkei 225 Stock
Average lost 2.6 percent, erasing most of this year's advance.
``Investors were cutting holdings of risk assets because of the
proposed restrictions on U.S. financial institutions,''
Kazuhiko Saito, an analyst at Tokyo-based broker Fujitomi Co.,
said today by phone. ``Rubber was dragged down by losses in the
equities and metals markets.'' Rubber for June delivery lost as
much as 17.5 yen to 285.1 yen per kilogram ($3,158 a metric
ton) before settling at 289.3 yen on the Tokyo Commodity
Exchange. It fell 3.0 percent this week, the worst performance
since the week ended Dec. 11. Prices have still gained 4.8
percent this month.

Chinese Steel Demand Growth to Continue on Demand from Builders, CISA Says
Steel demand in China, the largest consumer of the metal,
will continue to grow, a research department at the China Iron
& Steel Association said today. ``Industries including housing,
automakers, shipbuilding and machinery will continue to grow
fast,'' which will support steel demand, the association known
as CISA said today in a research report on its Web site. The
State Council recently approved a combined 882 billion yuan
($129 billion) investment in subway projects in 22 cities, it
said. China's growth rate accelerated 10.7 percent in the
fourth quarter, the fastest pace since 2007, as the nation's
$586 billion stimulus spending and record lending stoked car
and property sales. China's crude steel output rose 14 percent
to a record 568 million metric tons last year. The country,
which surpassed the U.S. as the world's largest auto market in
2009, may continue to see a ``hefty'' rise in demand this year,
the China Securities Journal reported Dec. 17, citing Baoshan
Iron & Steel Co. General Manager Ma Guoqiang. Baoshan, the
listed unit of China's biggest steelmaker, controls half of
domestic market for automobile sheets.

Soybean Cash Premiums Widen in the U.S. on Increased Purchasing by China
Cash premiums for soybeans shipped to export terminals near
New Orleans widened against Chicago futures after U.S.
exporters reported new sales to China, the biggest global buyer
and consumer. The so-called spot-basis bid, or premium, for
soybeans delivered this month rose to 60 cents to 63 cents a
bushel above March futures on the Chicago Board of Trade
yesterday from 55 cents to 62 cents on Jan. 20, government data
show. Bids for soybeans delivered in the second half of
February jumped to 54 cents to 58 cents from 47 cents to 55
cents on Jan. 20. The cash premium ``is firmer for soybeans''
because of increased export demand, said Charlie Sernatinger, a
Fortis Clearing Americas LLC vice president in Chicago. ``The
Chinese continue to pick away at business, a cargo at a time.''
China bought 230,000 metric tons (8.5 million bushels) from
U.S. exporters, including 55,000 tons for delivery by Aug. 31
and the rest in the marketing year that begins on Sept. 1, the
Department of Agriculture said yesterday. China's imports rose
14 percent to almost 42.6 million tons last year, a record.

Furukawa-Sky Expects 11% Jump in Aluminum Sales as Japan's Demand Recovers
Furukawa-Sky Aluminum Corp., Japan's biggest processor,
forecasts sales will climb 11 percent in the next fiscal year
as the nation's economy recovers from its worst postwar
recession. Sales will probably rise to 407,000 metric tons in
the year beginning April 1 from 368,000 tons this year, when
the economic slump slashed demand by 9.6 percent, Katsuyasu
Niibori, general manager at the company's corporate planning
department, said in an interview in Tokyo. Reviving demand in
Japan, Asia's biggest aluminum user after China, may support
the global price, which rallied 45 percent last year.
Furukawa-Sky supplies 30 percent of the nation's flat-rolled
products for autos, cans and construction. The Tokyo-based
company, along with rivals such as Kobe Steel Ltd., benefitted
from government rebates and tax cuts that boosted sales of
fuel-efficient vehicles. ``We expect sales next fiscal year
will return to the level in 2008-2009,'' Niibori said
yesterday. ``The recovery in domestic demand will probably
continue, although it will take more time for sales to reach
the peak volume in 2006-2007.''

Orange Juice May Rise as January Freeze in Florida Cuts Crop: Chart of Day
Orange-juice futures may rise as much as 28 percent in the
first half of this year because of crop losses from a January
freeze in Florida, said James Cordier, the founder of
OptionSellers.com. The CHART OF THE DAY shows annual crop
output in Florida, the world's second-biggest orange grower,
compared with Cordier's forecasts for a drop in production and
a price rally. Futures also may get a boost from an increase in
consumer spending, he said. ``Orange juice is extremely
undervalued,'' Cordier said in a telephone interview from
Tampa, Florida. ``If there's still optimism about the economy,
if that continues through the first and second quarter, orange
juice could easily trade to $1.75'' a pound, he said. That
would mark the highest price since May 2007. The 2010 harvest
may shrink to 128 million boxes because of freeze damage,
Cordier said. On Jan. 12, the U.S. Department of Agriculture
affirmed an estimate of 135 million boxes, already the lowest
in three years. The projection didn't reflect the impact of the
cold spell. A box of oranges weighs 90 pounds, or 41 kilograms.

Rice Prices Unlikely to Ease Until at Least March, According to UN Agency
Rice prices are unlikely to fall before March as major
exporters restrict overseas sales amid lower supplies,
according to the United Nations' Food and Agriculture
Organization. ``Prices are unlikely to subside before newly
harvested crops reach the market in March/April,'' the FAO said
in an e- mailed statement. Rice exports dropped in China,
Pakistan, Thailand and the United States and government curbs
in India and Egypt also restrained the availability in 2009, it
said. Rough rice has advanced 22 percent on the Chicago Board
of Trade from last year's low as the Philippines, the biggest
buyer, accelerated purchases to secure supplies after storms
destroyed at least 1.3 million metric tons of the crop. Concern
India may become a net importer after a drought also lifted
prices. Production last year totaled 678 million tons, a
decline of 2 percent from a year earlier, it added.

Gold May Fall Next Week as Rebounding Dollar Curbs Demand, Survey Shows
Gold may decline as a rebounding dollar curbs demand for
the metal as an alternative investment, a survey showed. Twelve
of 17 traders, investors and analysts surveyed by Bloomberg, or
71 percent, said bullion would fall next week. Four forecast
higher prices and one was neutral. Gold for delivery in
February was down 2.9 percent for this week at $1,097.70 an
ounce at noon in New York yesterday. Bullion is little changed
this year, erasing a gain of as much as 6.1 percent, as the
U.S. Dollar Index, a six-currency gauge of the strength of the
greenback, rebounded from a drop of as much as 1.6 percent. The
metal fell for the sixth time in seven weeks last week.
``Dollar strength is being accompanied by increased risk
aversion and weaker equities,'' said Walter de Wet, an analyst
at Standard Bank Ltd. ``We now find it difficult to see major
upside for the metal in coming weeks.''

Rusal Said to Raise $2.2 Billion in First Russian Company IPO in Hong Kong
United Co. Rusal Ltd., the world's largest aluminum
producer, raised HK$17.4 billion ($2.2 billion) in the first
initial public offering by a Russian company in Hong Kong, said
three people familiar with the sale. The company, controlled by
billionaire Oleg Deripaska, priced 1.61 billion new shares, or
a 10.6 percent stake, at HK$10.80 each, said the people, who
declined to be identified before a public announcement. The
final pricing gives Rusal a market value of $21 billion, about
12 percent less than Aluminum Corp. of China Ltd., the nation's
largest producer of the metal. Rusal offered the shares at
HK$9.10 to HK$12.50. The offering, delayed by regulators at
least twice on concern about Rusal's borrowings, comes less
than two months after the Moscow-based company completed
Russia's biggest corporate debt restructuring. Deripaska, also
chief executive officer, persuaded Hong Kong billionaire Li
Ka-shing, Malaysia's Robert Kuok and New York hedge fund
Paulson & Co. Inc. to invest. ``Thanks to the SFC these
professional investors got it a lot cheaper than they would
have otherwise,'' said Hong Kong- based Ben Collett, head of
equities at broker Louis Capital Markets (Hong Kong) Ltd.,
before the final pricing. ``Looking to the future, I suspect
the quality of these listings will decline, ironically, as the
confidence increases.''

For the complete stories summarized here, and for more of
the day's top news, see TOP <Go>.

-0- Jan/22/2010 9:41 GMT
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